After a recent VB update, it stopped working -- the argument was no longer passed to IE. I found this issue reported here: #8010, and it's said to have been fixed in Guest Additions 4.0.2, but it appears it's still broken. With Guest Additions updated to 4.0.4, when I use the above command, Internet Explorer starts with the URL: http://files/Internet%20Explorer/iexplore.exe%20http://google.com/.

So it appears that everything following the first space character in the program path ("C:\Program Files\Internet Explorer\iexplore.exe") is passed as program arguments.